68% consider gaining share in new markets as the key driver for planned acquisitions

About this survey

EY’s Global Capital Confidence Barometer is a regular survey of senior executives from large companies around the world. It is conducted by the Economist Intelligence Unit (EIU).

The respondent community i s composed of an independent EIU panel of senior executives and select EY clients and contacts.

Our 10th Barometer provides a snapshot of our findings, gauges corporate confidence in economic outlook and identifies boardroom trends and practices in the way that companies manage their capital agenda.

Respondent profile:

153 executives from power and utility companies in 48 countries were surveyed.

50% of P&U respondents have revenue of US$1b or more, and 20% have revenues in excess of US$5b.

39% of respondents are P&U CEO, CFO and other C-level executives.

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Confidence continues to improve, with utilities targeting investment in new markets and technology

Increased economic optimism and credit availability, as well as a dual focus on growth and portfolio optimization, will spur merger and acquisition (M&A) activity across emerging and mature markets.

Our latest Power & Utilities (P&U) Capital Confidence Barometer reveals continued optimism in the global economy, with 61% of the 153 global P&U executives surveyed seeing improvement. This translates into healthy deal activity, with Q1 2014 providing the highest first-quarter deal values in three years.

For 33%, economic optimism accompanies intentions to make acquisitions in the next 12 months, up from 28% six months ago. Moreover, credit availability is stable or improving, according to 92%, with 47% expecting to finance acquisitions with debt. Increased appetite for acquisitions and preference for debt over cash seem likely to spur more large-value transactions in 2014. Activity will be further sustained by:

Consolidation in the US and Asia-Pacific

Divestments and privatizations in Europe

Market and regulatory reforms globally

The emerging economies remain core to P&U growth strategies, with 72% intending to deploy acquisition capital in these markets. P&U companies' top five investment destinations are:

China

The US

India

Brazil

Singapore

Skills gaps and competition for talent threaten the sector. For 54%, this is likely to impact business strategies in the next 12 months, while 48% expect it to influence acquisition strategies.

As the P&U sector transforms into a customer-oriented and technologically driven industry, corporate strategies will increasingly hinge on the ability to attract and acquire the right skills.

Press release

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